SALARY AND WAGE MANAGEMENT

In this article we are discussing the ways and means of fixing the compensations
levels taking into consideration various factors like experience, identical ind
ustry knowledge, qualifications and proven skills. This in short we have compreh
ended as â Salary and Wage Managementâ .
Acquire Qualified Personnel:
Compensation needs to be high enough to attract applicants. Pay levels must resp
ond to supply and demand of workers in the labor market since employers complete
for workers. Premium wages are sometimes needed to attract applicants who are a
lready working for others.
Retain Present Employees:
Employees may quit when compensation levels are not competitive resulting in hig
her turnover of manpower.
Ensure Equity:
Compensation management strives for internal and external equity. Internal equit
y requires that pay be related to the relative worth of jobs, so that similar jo
bs get similar pay. External equity means paying workers what comparable workers
at other firms in the labor market pay.
Reward Desired Behavior:
Pay should reinforce desired behaviors and act as an incentive for those behavio
rs to occur in the future. Effective compensation plans reward performance, loya
lty experience, responsibilities, and other behaviors.
Control Costs:
A rational compensation system helps the organization obtain and retain workers
at a reasonable cost. Without effective compensation management, workers could b
e over or under paid.
Comply with Legal Regulations:
A sound wage and salary system considers the legal challengers imposed by govern
ment and ensures the employerâ s compliance.
Facilitate Understanding:
System should be easily understood by human resource specialists, operating mana
gers, and employees.
Wage and salary programs should be designed to be managed efficiently, making op
timal use of the human resources information system, although this objective sho
uld be a secondary consideration compared with other objectives
Systems to Achieve the Objectives
The above mentioned objectives are achieved by the use of the following systems.
1.Job Evaluation:
All jobs will be analyzed and graded to establish the pattern of internal relati
onships. It is the process of determining relative worth of jobs. It includes se
lecting suitable job evaluation techniques, classifying jobs into various catego
ries and determining relative value of jobs in various categories.
2.Wage and Salary Ranges:
Overall salary range for all the jobs in an organization is arranged. Each job g
rade will be assigned a salary range. These individual salary ranges will be fit
ted into an overall range.
3.Wage and Salary Adjustments:
Overall salary grades of the organization may be adjusted based on the data and
information collected about the salary levels of similar organizations. Individu
al salary level may also be adjusted based on the performance of the individual
employees.
Principles of Wage and Salary Administration
There are several principles of wage and salary plans, policies and practices. T
he important among them are:
(a)Wage and salary plans and policies should be sufficiently flexible.
(b)Job evaluation must be done scientifically.
(c)Wage and salary administration plans must always be consistent with overall o
rganizational plans and programs.
(d)Wage and salary administration plans and programs should be in conformity wit
h the social and economic objectives of the country like attainment of equality
in income distribution and controlling inflationary trends.
(e)Wage and salary administration plans and programs should be responsive to the
changing local and national conditions.
(f)These plans should simplify and expedite other administrative processes.
The Elements of Wage and Salary System
Wage and salary system should have relationship with the performance, satisfacti
on and attainment of goals of an individual. The following elements of wage and
salary system are identified by experts in HR,
a)Identifying the available salary opportunities, their costs, estimating the wo
rth of its members of these salary opportunities and communicating them to emplo
yees.
b)Relating salary to needs and goals.
c)Developing quality, quantity and time standards relating to work and goals.
d)Determining the effort necessary to achieve standards.
e)Measuring the actual performance.
f)Comparing the performance with the salary received.
g)Measuring the job satisfaction gained by the employees.
h)Evaluating the unsatisfied wants and unreached goals of the employees.
i)Finding out the dissatisfaction arising from unfulfilled needs and unattained
goals.
j)Adjusting the salary levels accordingly with a view to enabling the employees
to reach goals not attained and fulfills the unfulfilled needs.